After many weeks of speculation and leaks (including one from the OBR just an hour before the official speech), the UK Autumn Budget 2025 was somewhat underwhelming. The Chancellor Rachel Reeves did, however, announce some key changes to the UK’s financial and tax landscape which will be introduced over the coming years.
We have identified five key areas below and outline the main headline announcements:
- Personal Tax
The income tax rates freeze has been extended to 2030/31, so the stealth tax known as fiscal drag does a lot of heavy lifting, as more and more people drift into higher tax bands over time. It’s not glamorous, but it’s extremely effective for raising revenue.
Furthermore, the chancellor announced tax rate increases by 2% across all tax bands for property income and savings income and a 2% increase for basic rate and higher rate bands only for dividend income. For most investors, there is little that can be done about these increases but for business owners, they may want to consider acceleration of dividend payments before the increase bites, accepting that the tax point is also accelerated.
Elsewhere, a cap has been put on National Insurance savings (both employee and employer) of £2,000 for salary sacrifice pension contributions, although this measure will not be implemented until April 2029.
All in all, an interesting combination of measures which seem to tread the line between introducing necessary increases in taxes but not increasing tax on “working people”.
- Business Tax
The headline rate of corporation tax remains the same (25%) and full expensing for qualifying plant and machinery remains. However, the capital allowance main rate is being reduced from 18% to 14% from April 2026, which may slow down capital investment going forwards.
The rate of minimum wage will increase again from April 2026 which is fantastic for potential employees but does put increased burdens on employers, who are already feeling the pinch from the increase in employer’s NIC announced last year. Some reliefs in business rates given to the retail, hospitality and leisure sector aims to soften the burden somewhat.
- Capital Taxes
The headline rates of CGT and IHT have remained the same, with no changes to the ability to make gifts of unlimited amounts (Potentially Exempt Transfers), but there are some nuanced announcements that are worth mentioning.
The rate of CGT relief on disposals to Employee Ownership Trusts (EoTs) has reduced from 100% to 50%. This, together with the increased rate of Business Asset Disposal Relief previously announced (18% from April 2026) will make it less attractive for business owners looking to exit either by an outright sale or a sale to an EoT.
There was a small but welcome change to the previously announced changes to BPR and APR reliefs for Inheritance Tax. Whilst the changes announced are still to go ahead (see here for details), it has been announced that the unused £1m limit is now transferrable between spouses, in the same way that unused Nil Rate Bands are. This may avoid the unnecessary review of “mirror” wills which were previously required.
- Investments
The cash ISA limit has been reduced to £12k per annum, apart from for over 65s, in a bid to encourage investment in the UK (the excess £8k can still be invested in stocks and shares ISAs)
Tax relief for investments in Venture Capital Trusts (VCTs) has been reduced from 30% to 20%. Investors may look to invest in EIS or SEIS where the tax relief is higher, although these are inherently riskier investments. The lifetime limits for VCTs and EISs have, however, been increased, encouraging more businesses to raise capital under these schemes.
- Property
A new council tax surcharge will be introduced on properties valued in excess of £2m from 2028. Currently, council tax bandings are based on 1991 values so this does seem a logical move, although the Government will have to wait a while to before this measure bears fruit.
For landlords, the property tax increases discussed above are yet another reminder that the Government is clearly focused on taxing such income and, for accidental landlords in particular, property investment is becoming an expensive venture. Some may look to incorporate their property portfolios but this is by no means a silver bullet and often comes with other tax charges (CGT, SDLT.)
Final Thoughts
There were other announcements such as welfare reforms, support with energy bills and announcements on the wider economic outlook, which are covered in our full Budget summary.
If you are concerned about any of the announced changes or are unsure how they may affect you, please get in touch with your usual contact at Imperium and we would be pleased to discuss this with you.